Fusion: Machine Learning Suite

27 de ago. de 2023

The Fusion: Machine Learning Suite combines multiple technical analysis dimensions and harnesses the predictive power of machine learning, seamlessly integrating a diverse array of classic and novel indicators to deliver precision, adaptability, and innovation.

Features and Capabilities

• Multidimensional Analysis: Fusion: MLS integrates various technical analysis dimensions to offer a more comprehensive perspective.
  
• Machine Learning Integration: Utilizing ML algorithms, Fusion: MLS offers adaptability to market changes.
  
• Custom Indicators: Including dimensions like "Moon Lander", "Cap Line" and "Z-Pack" the indicator expands the scope of traditional technical analysis methods.
  
• Tailored Customization: With customization options, Fusion: MLS allows traders to configure the tool to suit their specific strategies and market focus.
  

In the following sections, we'll explore the features and settings of Fusion: MLS in detail, providing insights into how it can be utilized.

Major Features and Settings
The indicator consists of several core components and settings, each designed to provide specific functionalities and insights. Here's an in-depth look:

Machine Learning Component
Distance Classifier: A Strategic Approach to Market Analysis
In the world of trading and investment, the ability to classify and predict price movements is paramount. Machine learning offers powerful tools for this purpose.
The Fusion: MLS indicator among others incorporates an Approximate Nearest Neighbors (ANN)* algorithm, a machine learning classification technique, and allows the selection of various distance functions.
This flexibility sets Fusion: MLS apart from existing solutions. The available distance functions include:

• Euclidean: Standard distance metric, commonly used as a default.
  
• Chebyshev: Also known as maximum value distance.
  
• Manhattan: Sum of absolute differences.
  
• Minkowski: Generalized metric that includes Euclidean and Manhattan as special cases.
  
• Mahalanobis: Measures distance between points in a correlated space.
  
• Lorentzian: Known for its robustness to outliers and noise.
  

*For a deeper understanding of the Approximate Nearest Neighbors (ANN) algorithm, traders are encouraged to refer to the relevant articles that can be found in the public domain.

Alternative scoring system
Fusion: MLS also includes a custom scoring alternative based on directional price action.

"Combined: Directional" and "Alpha: Directional" scoring types represent our own directional change algorithm, simple yet effective in displaying trend direction changes early on. They are visualized by color changes when scoring becomes below or above zero.
Changes in scoring quickly reflect shifts in buyer and seller sentiment.
Traders may choose signals by Color Change in the indicator settings to get alerts when scoring color shifts, not waiting until the histogram crosses the zero level.



Application in Trading
Machine learning classification has become an integral part of modern trading, offering innovative ways to analyze and interpret financial data.

Many algorithmic trading systems leverage ML classification to automate trading decisions. By continuously learning from real-time data, these systems can adapt to changing market conditions and execute trades with increased efficiency and accuracy.

ML classification allows for the development of tailored trading strategies as traders can select specific algorithms, dimensions, and filters that align with their trading style, goals, and the particular market they are operating.

We have integrated ML classification with traditional trading tools, such as moving averages and technical indicators. This fusion creates a more robust analysis framework, combining the strengths of classical techniques with the adaptability of machine learning.

Whether used independently or in conjunction with other tools, ML classification represents a significant advancement in trading technology, opening new avenues for exploration, innovation, and success in the financial world.

ML: Weighting System
The Fusion: MLS indicator introduces a unique weighting system that allows traders to customize the influence of various technical indicators in the machine learning process. This feature is not only innovative but also provides a level of control and adaptability that sets it apart from other indicators.

Customizable Weights
The weighting system allows users to assign specific weights to different indicators such as Moon Lander, RSI, MACD, Money Flow, Bollinger Bands, Cap Line, Z-Pack, Squeeze Momentum*, and MA Crossover. These weights can be adjusted manually, providing the ability to emphasize or de-emphasize specific indicators based on the trader's strategy or market conditions.

*Note, we determined via testing that the popular "Squeeze" indicator can actually be well replicated by simply using inputs of 15 & 199 in the bedrock indicator - MACD; while we employed the standard "Squeeze" formula (developed by J. Carter [attributed hereby]) in Fusion: MLS, traders are hereby made aware of our research findings regarding such.

The weighting system's importance lies in its ability to provide a more nuanced and personalized analysis. By adjusting the weights of different indicators a trader focusing on momentum strategies might assign higher weights to the Squeeze Momentum and MA Crossover indicators, while a trader looking for volatility might emphasize RSI and Bollinger Bands.

The ability to customize weights adds a layer of complexity and adaptability that is rare in standard machine-learning indicators.

Custom Indicators: Moon Lander
The "Moon Lander" is not just a catchy name; it's a robust feature inspired by principles from aerospace engineering and offers a unique perspective on trading analysis. Here's a conceptual overview:

Fast EMA and Kalman Matrix
"Moon Lander" incorporates both a Fast Exponential Moving Average (EMA) and a Kalman Matrix in its design. These two elements are combined to create a histogram, providing a specific approach to data analysis.

The Kalman Matrix, or Kalman Filter, is a mathematical concept used for estimating variables that can be measured indirectly and contain noise or uncertainty. It's a standard tool in machine learning and control systems, known for its ability to provide optimal estimates based on observed data.

Kalman Filter: A Navigational Tool
The Kalman filter, an essential part of "Moon Lander," is a mathematical concept known for its applications in navigation and control systems used by NASA in the apollo program:

• Guidance in Uncertainty: Just as the Kalman filter helped guide complex aerospace missions through uncertain paths, it assists traders in navigating the often unpredictable financial markets.
  
• Filtering Noise: In trading, the Kalman filter serves to filter out market noise, allowing traders to focus on the underlying trends.
  
• Predictive Capabilities: Its ability to predict future states makes it a valuable tool for forecasting market movements and trend directions.
  

Custom Indicators: Cap Line and Z-Pack
Fusion: MLS integrates our additional proprietary custom indicators that have been published on TradingView earlier:

• Cap Line: Delve into the specific functionalities and applications of our proprietary "Cap Line" indicator in the published description on TradingView.
  
• Z-Pack: Explore the analytical perspectives, focused on the z-score methodology, and custom "Z-Pack" indicator by reviewing the published description on TradingView.
  

Buy/Sell Signal Generation Algorithms
Fusion: MLS offers various options for generating buy/sell signals, tailored to different trading strategies and perspectives:

• Fusion: Allows traders to select any number of dimensions to receive buy/sell signals from, offering customized signal generation.
  
• ML: Utilizes the machine learning ANN distance for signal generation.
  
• Color Change: Generates signals by selected scoring type color change.
  
• Displayed Dimension, Alpha Dimension: Generate signals based on specific selected dimensions.
  

These algorithms provide flexibility in determining buy/sell signals, catering to different trading styles and market conditions.

Filters
Filters are used to refine and selectively include or exclude signals based on specific criteria. Rather than generating signals, these filters act as gatekeepers, ensuring that only the signals meeting certain conditions are considered. Here's an overview of the filters used:

Dynamic State Predictor (DSP)
The DSP employs the Kalman Matrix to evaluate existing signals by comparing the fast and slow-moving averages, both processed through the Kalman Matrix. Based on the relationship between these averages, the DSP may exclude specific signals, depending on whether they align with upward or downward trends.

Average Directional Index (ADX)
The ADX filter evaluates the strength of existing trends and filters out signals that do not meet the specified ADX threshold and length, focusing on significant market movements.

Feature Engineering: RSI
Applies a filter to the existing signals, clearing out those that do not meet the criteria for RSI overbought or oversold threshold condition.

Feature Engineering: MACD
Assesses existing signals to identify changes in the strength, direction, momentum, and duration of a trend, filtering out those that do not align with MACD trend direction.

The Visual Component
The machine learning component is an internal component. However, the indicator also offers an equally important and useful visual component. It is a graphical representation of the multiple technical analysis dimensions, that can be combined in various ways (where the name "Fusion" comes from), allowing traders to visualize the underlying data and its analysis.

Displayed Dimension: Visualization and Normalization
The Fusion: MLS indicator offers a "Displayed Dimension" feature that visualizes various dimensions as a histogram. These dimensions may include RSI, MAs, BBs, MACD, etc.
RSI Dimension on the image + ML signals

Normalization: Each dimension is normalized. If any dimension has extreme values, a Fisher transformation is applied to bring them within a reasonable range.

Combined Dimension: When selecting the "Combined" option, the normalized values of the selected dimensions are combined using techniques such as standardization, normalization, or winsorization. This flexibility enables tailored visualization and analysis.

Alpha Dimension: Enhancing Analysis
The "Alpha Dimension" feature allows traders to select an additional dimension alongside the Displayed Dimension. This facilitates a combined analysis, enhancing the depth of insights.

Theme Selection
Fusion: MLS offers various themes such as "Sailfish", "Iceberg", "Moon", "Perl", "Candy" and "Monochrome" Traders can select a theme that resonates with their preference, enhancing visual appeal. There is also a "Custom" theme available that allows the user to choose the colors of the theme.


Customizing Fusion: MLS for Various Markets and Strategies
Fusion: MLS is designed with customization in mind. Traders can tailor the indicator to suit various markets and trading strategies. Selecting specific dimensions allows it to align with individual trading goals.

• Selecting Dimensions: Choose the dimensions that resonate with your trading approach, whether focusing on trend-following, momentum, or other strategies.
  
• Adjusting Parameters: Fine-tune the parameters of each dimension, including custom ones like "Moon Lander," to suit specific market conditions.
  
• Theme Customization: Select a theme that aligns with your visual preferences, enhancing your chart's readability and appeal.
  
• Utilizing Research: Leverage the underlying algorithms and research, such as machine learning classification by ANN and the Kalman filter, to deepen your understanding and application of Fusion: MLS.
  

Alerts
The indicator includes an alerting system that notifies traders when new buy or sell signals are detected.

Disclaimer
The information provided herein is intended for informational purposes only and should not be construed as investment advice, endorsement, nor a recommendation to buy or sell any financial instruments. Fusion: MLS is a technical analysis tool, and like all tools, it should be used with caution and in conjunction with other forms of analysis.

Traders and investors are encouraged to consult with a licensed financial professional and conduct their own research before making any trading or investment decisions. Past performance of the Fusion: MLS indicator or any trading strategy does not guarantee future results, and all trading involves risk. Users of Fusion: MLS should understand the underlying algorithms and assumptions and consider their individual risk tolerance and investment goals when using this tool.

30 de out. de 2023

Notas de Lançamento

- [ML] Dimension added : On balance volume
- [ML] Dimension added : Stochastic
- [Fusion] : Code optimisation, Bug fixes